Advanced Diploma in Procurement & Supply Management in procurement and supply Session 1 Theories of organisation and management.

Advanced Diploma in Procurement & Supply

Management in

procurement and supply

• Session 1 • Theories of organisation and management

About this session

This is the first session in this unit and covers organisations and organisational behaviour; the concept of management; how thinking on it has changed and why it is necessary; and the importance of organisational culture.

Session Learning Outcomes On completion of this session you should be able to:

Explain the main aspects of organisational behaviour Evaluate the main influences that shape organisational

behaviour Analyse the origins of management and organisational

behaviour Analyse the main contemporary approaches to

management and organisational behaviour

Syllabus references 1.1, 1.2, 1.3 and 1.4

Organisational Behaviour Organisations consist of both

Systems People

An organisation has been defined as “a social arrangement for the controlled performance of collective goals”

CIPS (2012 p2)

‘Organisational behaviour is concerned with the study of the behaviour of people within an organisational setting.’

Mullins (2005, p. 26)

Mullins’s framework

Definitions of management Management is the process of getting results by making the best use of

available human, financial and material resources (CIPS 2012, p.3)

The key purpose of management (and leadership) is to ‘provide direction, facilitate change and achieve results through the efficient, creative and responsible use of resources’.

Management Standards Centre (cited in CIPS 2012, p. 3 )

Management is ‘a social process entailing responsibility for the effective and economical planning and regulation of the operations of an enterprise, in fulfilment of given purposes or tasks.’

EFL Brech (cited in CIPS 2012, p. 3)

Characteristics of organisations

Structure (controlled performance) A formal network of authority and responsibility relationships,

division of labour and communication channels. Objectives (collective goals) Stated quantitative and/or

qualitative aims towards which activity will be directed, and against which performance will be measured.

People (social arrangements) Organisations are ‘made up’ of people, in a complex network of formal and informal roles and relationships, individual and collective effort, decision-making and communication.

Fayol’s functions of management Planning:

defining objectives or desired results, and formulating courses of action to achieve them

Organising: establishing a structure of tasks which must be performed to achieve the

objective, and allocating them to appropriate individuals and units

Commanding: instructing and influencing people towards the accomplishment of tasks and goals

Co-ordinating: integrating the goals and activities of individuals and groups within the

organisation, through communication

Controlling: measuring and monitoring the process of work in relation to the plan, and taking

corrective action where necessary

Fayol cited in CIPS, 2012, p. 7

Mintzberg’s managerial roles

The importance of leaders Leaders energise and support change, which is essential

for survival in highly competitive and fast-changing business environments

Leaders secure commitment, mobilising the ideas, experience and motivation of employees

Leaders set direction, helping teams and organisations to understand their purpose and goals

Leaders support, challenge and develop people, maximising their contribution to the organisation

Leaders use a facilitate-empower style (rather than a command-control style), which is better suited to the expectations of empowered teams and the need for information-sharing

Reasons for forming organisations For social reasons

Organisations meet human beings’ psychological needs for relationship, belonging and identifying with something ‘bigger’ than themselves.

To enlarge abilities or increase productive capacity This is done not only by ‘pooling’ energies and resources, but by

facilitating specialisation. To accumulate information and knowledge

Because organisations are continuous, they build up a knowledge base through the combined learning and information-gathering of members over time

To facilitate efficiency Organisations make it possible for objectives to be achieved with less

expense of time and resources than individuals can manage working on their own.

Organisational metaphors The organisation as a machine The organisation as a biological organism The organisation as a brain The organisation as culture The organisation as a political system Psychic prisons Flux and transformation Instruments of domination

Gareth Morgan in Creative Organisation Theory

Organisation structure - 1

Formal organisation structure consists of a framework designed to:

Define work roles and relationships Define work tasks and responsibilities Channel information flows efficiently

through the organisation Coordinate goals and activities of different

units Control the flow of work, information and

resources

Organisation structure - 2Formal organisation structure consists of a framework designed to:

Support flexible working and adaptability to changing internal and external demands

Facilitate organisational learning Encourage and support the commitment,

involvement and satisfaction of the people who work for the organisation

Support and improve the efficiency and effectiveness of the organisation’s performance through all of the above

Influences on organisation structure The strategic objectives or mission of the

organisation The task or ‘business’ of the organisation The technology of the task The size of the organisation Geographical dispersion The environment of the organisation The culture and management style of the

organisation

Mintzberg

Components of organisation structure

Organisational flexibility

Modern trends in flexible organisation:

The flattening of organisation hierarchies Project management structures Horizontal structures Boundaryless structures Functional flexibility or versatility Numerical flexibility

Markets Separate firms act independently of each other,

forming temporary relationships based on competition or transactions and exchanges.

Hierarchies An organisation forms a single, structured entity, within

which all relationships are formally defined and all activities integrated, as in a bureaucracy.

Inter-organisational and network structures

Virtual organisations Are supported by on-going developments in ICT which allow data-sharing

and synchronisation, interactive communication and virtual meetings

Allow a high degree of flexibility (numerical, temporal and functional)

Enable information and other resources to be mobilised efficiently in widely dispersed regions and specialist sectors, while allowing central control, pooled information and consistency of service and image where required

Offer cost savings in areas such as employment, overheads and logistics,

Exploit an increasingly knowledge-based economy, where the prime commodities are knowledge, information and expertise

Exploit international markets, as they enable members to take advantage of local knowledge, indigenous language speakers, indigenous trading partnerships, etc.

The STEEPLE framework Socio-cultural Technological Economic Environmental (or ‘ecological’) Political Legal Ethical

Ethical issues At the macro level

issues of the role of business and capitalism in society

At the corporate level issues which face an individual organisation as it

formulates strategies and policies about how it interacts with its various stakeholders

At the individual level issues which face individuals as they act and interact

within the organisation and supply chain

Corporate social responsibility (CSR)

Law, regulation and Codes of Practice impose certain social responsibilities on organisations

Voluntary measures may enhance corporate image and build a positive brand

Above-statutory provisions for employees and suppliers may be necessary to attract, retain and motivate them to provide quality service and commitment

Increasing consumer awareness of social responsibility issues creates a market demand for CSR

Elements of culture

Hofstede’s dimensions of culture

DIMENSIONPower distance The extent to which unequal distribution of power is

accepted.

Uncertainty avoidance

The extent to which security, order and control are preferred to ambiguity, uncertainty and change

Individualism The extent to which people prefer to live and work in individualistic (‘I’) rather than collectivist (‘We’) ways.

Masculinity The extent to which social gender roles are distinct.Long-term orientation

The extent to which society embraces long-term devotion to traditional, forward thinking values.

The Trompenaars modelIn relation to how individuals relate to other people, a society may emphasise any of the following five aspects:

Universalism or particularism Individualism or collectivism Affective or neutral Specific or diffuse Achievement or ascription

In relation to time and the environment, societies may emphasise any of the following two aspects:

Past/present or future Internal control or external control

Cross-cultural management

Team-working Communication Participation and involvement Conflict resolution International issues

Cultural differences may raise issues in the following areas:

The cultural web

Harrison/Handy’s four cultural typesCULTURE KEY FEATURES

Power culture(Zeus)

• Power centred in a key figure, owner or founder• Control through direct personal communication• Little formalisation, rules or procedures

Role culture(Apollo)

• Classical, rational organisation (bureaucracy)• Formalised, impersonal: authority based on position,

function; conformity to rules and procedures

Task culture(Athena)

• Management directed at outputs and results• Team-based organisation: horizontally structured, flexible• Valuing expertise, communication, collaboration

Person culture(Dionysus)

• Serves the interests of individuals• Management function administrative and supportive, rather

than directive

Organisational forms - 1

CLASSICAL MODERN POSTMODERN

Approximate period

1880–1970(the industrial age)

1970–1990(the technological age)

1990–(the information age)

Organisation metaphor

Machine Open system Flexible tool

Organisation structure

Rigid, hierarchical chain of authority

Decentralised: delegated authority and local units

Not important: action, not ‘design’

Focus Internal processes Human relations Adaptability and innovation

Production focus

Mass production: efficiency

Customisation: meeting customer demands

Time to market: speed of response

Organisational forms - 2CLASSICAL MODERN POSTMODERN

Work organisation

Routine, repetitive work

Teamworking Entrepreneurial units

Human resource

Full-time employees Flexible working patterns

Networks, sub-contractors

Control mechanisms

Direct supervision, rules and procedures

Decentralisation: local problem-solving

Not important: results, not rules

Key values Control and predictability

Quality, customer service

Change, flux, quick decisions

Approach Find the ‘one best way’ (prescriptive approach)

Find ‘best fit’ (contingency approach)

Maximise responsiveness

Strategy for uncertainty

Avoid Manage Exploit

Developing ‘schools’ of organisation and management

Scientific management: key features

• Recognise a clear-cut division of responsibility and work between management and workers

• Develop a science for each element of work, to replace the old rule-of-thumb method: the best way of doing a job

• Apply work-study techniques to establish the most efficient operations, motions and processes

• Redesign jobs so that each worker carried out only one job operation as a specialised job

• Scientifically select and train workers to ensure all of the work being done is in accordance with the principles of scientific management

Henri Fayol’s 14 principles of management

Division of work Scalar chain of authority Correspondence of

authority and responsibility Appropriate centralisation Unity of command Unity of direction Initiative

Subordination of individual interests

Discipline Order Stability of personnel Equity Remuneration Esprit de corps

• Hierarchy of authority• Specialisation• System of rules• Impersonality• Rationality• Uniformity• Technical ability• Stability

Weber’s general characteristics of bureaucracy

Downsizing organisations, or ‘chunking’ Decentralising authority, or delegating Decreasing the rigidity of specialisation Improving structural communication

mechanisms in all directions Emphasising quality, customer service and

flexibility as key cultural values

Addressing the dysfunctions of bureaucracy

Task the nature of the organisation’s inputs and outputs and the work

activities to be carried out as part of the conversion processTechnology

the manner in which organisational tasks are carried outStructure

the patterns of organisation, division of labour, co-ordination, authority relationships and communication channels by which activities are carried out

People the nature of the people undertaking the activities

Management the co-ordination of the other sub-systems, and the direction of

organisational activities as an integrated whole

Basic sub-systems for analysing work organisation and activities

It draws attention to the dynamic nature of organisations It creates awareness of subsystems, each with goals which

must be integrated It creates awareness of the inter-relatedness of aspects of the

organisation, and a focus on the needs of the system as a whole

It focuses attention on the interrelationship between the organisation and its external environment

It integrates the insights of the formal classical approach and the informal human relations approach, by seeing these as inter-related subsystems

Contribution of the systems approach

Organic organisations

A ‘contributive’ culture of information and skill sharing, encouraging versatility and team-working

A ‘network’ structure of authority and communication, allowing decentralisation and a range of lateral relationships for coordination and self-control

Job design that allows flexible definition of tasks according to the needs of the team and changing demands

Focus on goals and outputs rather than processes

Typified by structural and cultural fluidity and flexibility, involving:

The postmodern organisation

Multi-directional information flows, through networking Permeable boundaries with the environment Downsizing and delayering to shorten decision processes

and decentralise authority to front-line responsive units Staff flexibility and empowerment: multi-skilling, team

autonomy, motivation for commitment, encouragement of entrepreneurship

Cultural tolerance of ambiguity, change and flexibility

Involves maximising structural and cultural fluidity through mechanisms such as:

References • CIPS (2012) Management in procurement and

supply, Stamford, Profex Publishing LimitedChapter 1 pp 1-30

Chapter 2 pp 31-46

• Mullins et al (2004) Management and organisational behaviour, Harlow, Pearson Education LimitedChapters 1, 2, 10, 11, 12, 13, 17 & 18

• Human Resource Management (8th edition) by Torrington et al, FT Prentice HallChapters 4, 13 & 27